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Claims handling challenge of Tianjin explosion

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Ringo Ho of Cunningham Lindsey China.

Ringo Ho of Cunningham Lindsey China.

Claims handling challenge of Tianjin explosion

By James Brewer

Factors behind the deadly explosion at Tianjin, serving Beijing and one of the busiest ports of the world, were spelled out by Ringo Ho, technical director in China for loss adjusting firm Cunningham Lindsey, when he addressed the 2016  conference of the International Union of Marine Insurance.

Mr Ho said that the tragedy could be compared to the September 11 2001 attack on the Twin Towers, by reason of the shock delivered to the insurance industry.

In the August 12 2015 incident, casualties according to official figures were 165 persons dead, including 99 firefighters, 11 police officers, and 55 others, including residents living nearby. There were 798 persons injured of whom 58 were severely hurt. Property damage included 12,428 brand new vehicles in storage, 304 buildings; and 7,533 boxes in the container sectors.

The cars in the area were very expensive: 50,000 high-end vehicles valued at Euro3bn – the claim could be for half of that amount.

Outlining to the Genoa conference the train of events, Mr Ho said that at 10.50pm a fire in one of the warehouses caused a first explosion at about 11.30pm, and there was a second blast within seconds affecting four huge container yards.

Capt Marius Bakker and Marcelo Garibaldi.

Capt Marius Bakker and Marcelo Garibaldi.

The final report estimated that the initial cause of the fire was at Ruihai Logistics a private logistics company which handles hazardous chemicals in the port of Tianjin. Nitro-cellulose which can self-ignite at very high temperatures was estimated to have heated to over 60 degrees C.

Although the official figure of damaged containers was 7,500 the loss adjusters estimated the figure was 20,000 of which half contained cargo. The most dangerous substance was sodium cyanide and that is why the government had to seal off the area: there was 680 tons of this chemical despite the fact that Ruihai was supposed to store only 70 tons.

The challenge was how to verify the loss, taking into account the salvage issue, insurance, concurrence, depreciation, tax and subrogation and the requirements of the China Insurance Regulatory Commission. The tax question was still to be settled and could be in the amount of 100% of the value of the cars, so this was seen as having a very big impact on the claims settled, said Mr Ho.

Recovery of the site, he went on, necessitated treatment of water, soil and air contamination.  “None of us wish such disaster will happen again,” said Mr Ho, “but we do wish that the lessons we learned from this painful experience will be a help to generations to come.”

Cunningham Lindsey’s team at the IUMI venue included Capt Marius Bakker of the Netherlands and Marcelo Garibaldi who heads the company’s Argentina operation. Capt Bakker specialises in investigating casualty claims ranging from collisions and fires to water ingress. Mr Garibaldi – a descendant of Giuseppe Garibaldi the 19th century fighter for Italian unification – specialises in marine cargo and contingency claims.

Tianjin is meanwhile keen to promote its positive attractions, as “a city of taste, a city of joy,” for tourists. A former treaty port, it is architecturally “a combination of Chinese and western elegance,” according to material distributed by the authorities and agencies at the World Travel Market 2016 in London in November.

Facing the Bohai Sea, the metropolis – its urban centre is some 47km from the port area – has a population of around 15m. It is “the largest open coastal city in north China” with a 153km coastline.

Tianjin Binhai airport is a major airfreight and passenger centre, 30km from Tianjin harbour, and 134km from Beijing. In June 2016 the expanding Tianjin Airlines, a subsidiary of HNA Group, launched its first UK route, from London Gatwick to Chongqing and Tianjin, twice weekly with Airbus A330-200 aircraft. A London to Auckland via Chongqing route will launch in December 2016, and a London to Xian route in May 2017,

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